ask that we how are we minimizing the exposure to them. >> any other questions? yeah i have another question too in the risk -- but's a little bit different and so my understanding is that the assumptions in had model and i guess what i'm really -- c c's local build out component is critical and i want to go on record again saying thank you for your work and your long-term commitment to this because, i think that c c a without a local build out is not a c c a program and we need to be moving towards on site generation as quickly as possible but one of the assumptionings that i think you are using is this commercial enrollment i don't know what we want to call it but the commercial participation in the program and i feel there may be some other kinds of risks that are not direct to the rate payer but veeply if there is not enough commercial enrollment or businesses change and opt out at that point or something might

happen along the road? could you talk about that risky component assumption a little bit and what the risk is inherent in will. >> if i understand you, is that risk specific to commercial customers. yes. >> essentially it would be the same generic risk applied to residential you have large commercial customers downtown and high rises downtown consuming a big part of the energy and so they are more sensitive to fluctuation and is rates. really though, as it would apply to residential customers, fluctuation and is rates as they occur on the market, would be greater than they will be under a regime that is based upon local fixed capital cost and is that is what the build out will do you end up with over half of the power supply in a fair short period of time. being behind the meter and being essentially hardware

and performance based rather than market or fuel-based. so, from the point of view of the commercial customer, you know, there are now over a thousand municipallies in the united states over c c a service and there has not been to my knowledge been a proem with which the program commence with a rate increase now clearly if the program commences with a rate increase that will send a negative signal to the commercial customers the approach we are taking here does not require a rate increase which actually shows surplus and is potential discounts for customers that sign on for this product and so there is an opportunity here to not have to answer that universal premiums where you are testing the willingness of commercial customers to pay extra we view that as a result of market because the market has been problematic over the last ten

years but energy efficiency there are no such problems with wind farms. it's or solar its a superior environment for rate certainty and it would both offer residential customers and the city considerably less risk around the of service. >> that is once you have built out. yes, we have a farrell rapid build out schedule for that very reason we would start the program obviously with 100% bought power and then, quickly, roll out local resources to hedge that and so you would have within a couple of years a significant hedge on your wholesale price of power and by your four-year, five, year six, you are over 50% mitt gated and whatever happens in the market whether it goes up or down it is hit the c c a customer less than it would hit the p g and e kir

or the direct access customer who have a more direct exposurethat commodity price. >> and then the residents you bring along after the commercial customers are enrolled. >> well in general because year face one is currently focused on the residential class we are recommending that the residential customers be added quickly in phase two along with the commercial customers to balance the load between day time and night time load is highly advisable in terms of lowering the costs of service and improving the load shape of the aggregation and so yes, we believe that commercial customers should be added right way way, and then the site development that is another piece that i do not understand how it works. >> so you have to do a site analysis to identify where the best sites would be and then isn't there risk inherent in

that site analysis in getting these the development of these sites and that you are saying that can all happen by 2014 2014 as far as doing the analysis and build out piece. >> yes you have a great opportunity here and an satisfying vang that other supply ires don't have which, is the end use meter data of the city and that is the data that we are using to do this work and so every meter and is 365,000-meters for several years into the past to see where is the higher merge intensity in the city and where is the higher tier load and high value load and so this approach essentially would allow the city to go and pull those customers identified in our survey which, is ongoing now and will be complete in a few months and will identify the necessary number of sides to build out this model and show the economics would be favorable for those sites and then it's a

matter of pulling those customers and offering them just as a solar company would offer them but we are able to offer them in advance of pulling them is and so the mark cost would be tiny vs. if you had a feed-in marketing program where you would have to have them call and you then look at their utility bill and then earth the economics of the case. in this case, we are turning it on it's head so the targeting can takes place before money is spent. and then essentially offering a community solar shares program so that customers have the opportunity to participate in that equity even if they are not home own owners or building owns and that is the vas imagine of the customer and is so you get a progressive social impact they same time you have a high targeted complication and investment for an optimal performance and that is really the core concept here. >> all right we are 15

minutes into the presentation any other question? mr. courtney? i'm going to take the liberty and go into the presentation if i may can i get into one of the documents. >> whatever you want. so i see here a document that is i believe fourth in a series of organizational charts. it's libel and i don't have my glasses but it's one 72 out of 442. it's the program that maximizes green jobs page and it has the three color coordinated references public over site and control, peck sector innovation and implementation and maximize local green -- would you speak belief on the maximized local green jobs as it relates to the

local enforcement and job training please? >> yes this program we are projecting to create 3,000 jobs per year that would be generate by this employment and the employment would be under taken by private company asks so they would be solar installingers and energy fishgee retrofit companies under under the local hiring ordinance there is a requirement that a certain number of jobs be local and so we have been working to earth a earth

earth a certificate contain a job [spelling?] and there is no program to employ the people trained by the program and so we are recommending o wd restart and expand it's operation to train these folk who would then be qualified into a pool of local labor for hiring for by the company that is implement these projects. . >> all right mr. moran? one of the things i have been trying to figure out is how this effort that you are describing measures with what we have in front of us and with what the board of supervisors have improved and.

>> yes, last time, i asked whether it was an either or and whether we have phase one in front of us or if you can do both if you choose to and the sense that i had it was more the latter and in reading this material though, it seems that you proposed to somethingly change what would be in the phase one on offer particularly the price and that, then that raises a series of very particular question that is have not been addressed in this material and so for example we have not to exceed rate proposal in front of us that is a rate proposal that says if you are doing what i would call our version of phase one this is an a money that we believe is necessary to cost the cost of

that. >> you are referring to the resolution. >> yes and do you have a copy of that resolution? no i do not, well you should because it's really relevant for this discussion. >> can you give him a copy donna? what you are suggesting is that the premiums that we are proposing to require from phase one participation can all but disappear. >> yes. and it's not clear to me what the math is that leads you to that conclusion. >> okay. and now you have increased and your proposal increased the service provided, i can only assume that, that service will create a sufficient profit that

you can off set the costs that you are deciding not to pay for the premium and before i can even think about that i need to know what that math is what the mechanism is by which we can offer on phase one a lower rate? and what i'm concerned about is that if that includes a bet that you are going to have certain facility it's online on a certain schedule schedule and the off setting revenue is sometime in the future then we have to be more confidant about what that future is and that is a much more complicated discussion but i think it's much more helpful to know for phase one and i do not expect you to know that off the top of your head here but for phase one how is it that you can bring that down and i do notice on your

preliminary resources mix you have a lot of wholesale resource application and that is subject to the same resource that the she'll contract is and or worst at least the very well contract says what the rates are and if this is under some other contract we should know it and if it's an open market then that has significant risk attached to it. commissioners the risk is as near as i can tell in here one of the risks in here is a perform risk and we are talking about thousands of small projects having to get implemented and you folkings prepared a risk report which went into that and highlighted that as one of the real challenges of the program and how can you go out and get all these things done quickly and at the cost that you are suggesting

is reasonable? this material shows that it would be done by the department of management and projects and so, what -- what i had hoped to wrap my point up. what i had hoped for of the was a segmentation of the decision-making process that allows us to do whatever we do for phase one and take time to understand what your proposal is for phase two and so it doesn't sound like that is the autopsy that you are giving me and that i have to understand anymore phase one and this material hasn't helped me on that. >> i'll do my best evident. main difference here for phase one, there is no real change to the she'll agreement required. we are not recommending a change to the agreement for phase one.

the main change, is adding the increment available of hetch hetchy power making the decision later than selling it into the market to make it available to the c c a as a matter of policy. that ads lower cost energy into the can you repeat mix we have you have for she'll. >> and do you account for the per count revenue? >> what?. >> commissioner there is no forebound revenue and the hetch hetchy is modeled at market rate and those have been confronted by todd ritchie. >> yes and the other big piece is the change in the renewable energy credit strategy because there are several different

categorize and they are available at very different prices on the marketplace but as far as the wholesale we have five% power purchase treatments just like the she'll agreement and so there is no speech special wholesale strategy in this model the change in the reek strategy and a change in the hetch hetchy strategy and they are agency decisions from which the program from the agency side and not some new requirement on she'll that would require going back to the drawing board, urk you are talking about changing up the resource mix rather than the local build-up pees piece for phase one. >> that is right is then a slight different number of customers with that mix. 12 residential. >> it's still upall residential at this point. but we want to writing on the commercial customers as soon as possible. >> that is correct but i'm more concerned that you have not

seen this resolution because it speaks to the very issues that we have been talking about here and that we are about to vote on. i was told that there were no action items and so i'm completely taken by surprise. >> well the staff has communicated with you on the ten-minute requirement and the communicatessed with you on the resolution yes or no. >> yes, all of the materials before you are publicly available, we notified local power that's correct the three items to be that appear on your agenda would be discussed today and after the meeting with the commission secretary informed then that the commission had alcarted ten mints. >> okay. (allocated ten minutes. >> there is a draft resolution to be carefully noticed that no action to adopt the scheduled

would a don't --. >> right the only issue we are having now is a discussion and i want to make sure that everybody is on the same page for this discussion because the resolve seconds of this draft resolution are very important as commissioner morian and commissioners have talked about. and what we will get to very quickly is with the expect to not to exceed rate would your recommendation be not to adopt those. >> that is correct we believe ts too high and would cause harmful public relations as far as the trust of the city and it's also unnecessarily high. with all do respect to staff and the efforts to get to this point this really is a matter of going out to the market with a lot of requirements placing all of theth requirements on a supplier in a market where a feud actions by the agency would

significantly lower the cost basis of the service and those actions have not been taken there is a result that you have a very high price here. >> and so the danger is that under the statute 117 that the customerses that optout morian raised in in the meeting that in an experience with direct access has shown that the opt in inrates for the green access is effectively low and effectively you have loss the customer that is opt out and that could be in the hundreds of thousand and is so we see it as being unnecessarily risky as far as the participating load of the program and this could easily be improved by these very simple action to the agency matters of monthly would he. policy. >> and those matters are the two that you have identified. yes, sir.

>> is there any assumed financing by of the first fades by the second phase? >> i want to make sure that i answer your question correctly there is no amortization in the model or delaying of deter service in the model. there is no provision of revenue from other customers for those phase one customers. they are ultimately combined into one group. i believe ill the answer is no. >> if phase two were delayed how would that ivelgt the financial performance of phase one. >> i'm going to let my mathematician answer that. >> depending on the rate increase for pricing so the buildup acts as a hedge against wholesale expos so the question is how does delaying that

buildup impact this agreement depends on what reek costs.. >> would you mine coming up and giving us special courtive on this because what i think is being said is that phase one is a resource mix question and these can rex and hedging makes those available in the recollection strategy and if we did that alone and build out aside and if we want to talk about phase two as a build outthat, that would potentiallily decrease our rates the customer rates for c c a? is that a true assumption? because i think that is quite significant because we have kept coming up against this issue of the rate increase and that we don't the want to lose customer and is that could potentially be a deal breaker for some customers. >> so assistant general manager. we have the shared goal to make sure had a we are

going out with rates as low as they can be where we are not yet of the same opinion as what is firm and available from hetchy and also the costing and so to give you a perspective we are typically sell hetchy power over the last ten years when we have excess to sell and we don't always have excess to telesell at 4 kilowatts an hour and the pickle is in dry years suggests that we may not have in the current year firm power and that is a key issue and so ms. hale who knows this better than i do the seasonality and the if i rememberness of how much is available when, when we can bank through the year and buy more expensive during the none run off period matters a lot. and so mr. moran races a good point

if you bring up the most average and cost effective which hetchy is the most cost effective in california and it's an amazing system but i can't tell you it's firm for the next ten or 20 years and you will see that in one of the slides in the consumptions is that ap i has assumed that we have relatively standard prices and relatively affordable hetchy and that it's form year after year and that is a risk had a i can't mitigate away without collateral or or reserves. >> and typically what we do on that is we have a farming contract that says, where hetchy cannot meet the load. somebody else will and we can lock in the price for that. that is typically always more expensive and so in the last ten-seven years, we typically had to buy at six to 7 cents per kilowatt hour and we are always trying to sell it at

four so we are trying to maximize for hetch hetch worry and but which are having to buy when others have to buy too and so the risk is all a material matter to mitigate away and i i understand u.n. they are doing additional work on that over the next few months and. >> the firming costs are not separately dwhraintd and so that would been something where they would look at their reserves or projected surplus and decide how to allocate those if necessary. and that is a significant issue what staff has come up before and what the city leadership has given us authority to go forward with is one that mitt gates and minimizes those risks and so with a contract with she'll with six known price that provide it in dry years and wet years and

keep it green is the only way that we could come to you and propose to you and prepare for the board a way to do that into a type of a contractual risk transfer. because we cannot do even do that because we don't know predictably what rainfall will be nor does anybody on our planet and so that is why you enter into a contractual follow up party. >> any other comments? i do want -- if i may mr. president and i do realize that there are some members of the board of supervisor and-if it's already if we can invite them up to comment if they would like. >> i'm francis cowho gave me a cart from public comments and would you want to come up and if they are willing and want to speak ... . >> if i may, just make one final remark, we did model the

financial conditions in the model. >> i do read the resolution that is important to us can i have your input on that? mr. costa? . >> commissioners as a member of the public i have been participating in these deliberations since the year 2,002. who i see here is that from the finds of the public when we listen to the deliberation at n afc o and what took place over there you have a very very far cry what has transpired today. it's a very refar cry. too many variables have been imbruesed now, not

very long ago. your staff went before the trans bay the joint trans bay and presented something over there insisting that or projecting that they could supply hetch hetchy power. . and that is not very easy. as you know your chief financial officer has said you can predict. the time of energy or the quantity of energy we are going to get from hetch hetchy whether it's a reliable amount to be supplied. if you deal with something like a trans -- they have more money and they can afford to pay more but, the question is are you all able to supply? now your staff, they gained again i plea with you your staff are constituent sitting down over there and they have no

clue whatsoever about this presentation. in fact, they have no clue, i doubt if they can explain to you and you are welcome to bring them here to you about the resolution. this is -- stick to what is on their agenda and if you bring the variables over here and some of us can connect the dots but most people cannot. and so we have to go slow with this. we cannot introduce too many variables, which do not have certainty. in this business, in this market nobody has certainty and you are a large entity that has control over those thing we

don't want you all in the business of sub prime loans that is happening with this presentation. too many variables, too much uncertainty, and is totally confused. thank you very much.. >> any comments before we adjourn? hi my name is hope and i have been an alas ska commissioner last co's discussion for c c a and what i here from local power today although it has some different pictures associated with it very much the same thing that local